How to Buy a House in North Carolina: A Homebuyer’s Guide
Updated: October 14, 2023
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Since last year, the typical home value in North Carolina has risen by over 19% to $330K. Still, the average home value in the state is lower than the national average of $357K.
If you're trying to buy a house in North Carolina, it's a good idea to familiarize yourself with the entire homebuying process first. Because purchasing a home involves taking out a mortgage that will take years to repay, it’s important that you feel confident about your decision.
Choose an Ideal Location
The purchase price of your home in North Carolina will vary based on where it’s located. Typically, homes located in suburban areas are less expensive than those in metropolitan cities. Prices may also be impacted by neighborhood amenities, transportation and other comparable aspects.
For example, the typical price of a home in Raleigh is around $448K. This is considerably more than the median home price in Broadway, which is $239K. While suburban areas may be the cheapest places to buy a house in North Carolina, they may not be the least expensive place to live.
Calculate Mortgage Rates
If you are buying a home in North Carolina, it is essential that you understand the financing options available to you. Mortgage rates vary by mortgage type, the buyer’s financial profile and lender.
To calculate your mortgage rate, lenders will take into account your income, credit score, requested loan amount and other pertinent factors. Shopping around and comparing prices is the most effective way to find the cheapest rates.
Prepare Down Payment Requirements
Down payment requirements vary by mortgage type. For instance, some loans, like FHA loans, require a low minimum down payment of 3.5%m while others require a down payment of 20%. In addition, if you qualify for a VA or USDA home loan, you may be eligible for a zero-down-payment option.
Get Pre-Approved for a Mortgage
Before searching for houses in North Carolina, it is recommended that you obtain pre-approval for a mortgage. This shows sellers that you’re a serious buyer and allows you to see the mortgage amount and rates available to you.
Remember that pre-approval and prequalification are different. Pre-approval for a mortgage loan signifies that the lender has committed to providing you with a particular amount of funds to buy a house. In contrast, prequalification simply indicates that you are eligible for a loan; this is less significant than a pre-approval and the lender has no obligation to fulfill it.
Conduct a Home Inspection
Home inspections are an essential part of the homebuying process. This is important for identifying potential issues with your home. If you purchase a home without first having it inspected, you may have to deal with more expensive health and safety issues later on. In addition, some lenders may require a certified home inspection before approving a mortgage loan application.
Close Your Mortgage Loan
Following the completion of the home inspection and appraisal, the mortgage lender will now be able to make a loan offer. If you accept the terms outlined in the agreement, you can now initiate the closing process.
During this phase, it is possible that you will incur a range of costs. If you are experiencing trouble obtaining funds for your closing costs, there are programs in North Carolina that might assist you.
North Carolina Homebuying Details
It is important to keep in mind that North Carolina has lower average home prices than the U.S. as a whole, along with much lower than average living expenses. You can lower your cost of living by purchasing a home in a rural area, but you should recognize that you may be sacrificing access to amenities.
Moreover, homebuyers in the state have access to both conventional and government-backed mortgages. In addition, North Carolina provides a variety of down payment assistance programs for first-time and low-income homebuyers. Applicants who qualify can get a grant or second mortgage to help cover closing costs or down payments.
The NC Home Advantage Mortgage program offers loans of up to 5% of the initial mortgage to both first-time and recurrent homebuyers. Approved first-time homebuyers and ex-servicemen may receive up to an additional $8,000 as part of the NC 1st Home Advantage Down Payment.
The Community Partners Loan Pool (CPLP) offers eligible homebuyers an interest-free second mortgage with a deferred closing date. To qualify, you must have a credit score of at least 640 and your household's income cannot surpass 80% of the area's average income. Additionally, applicants must complete a homebuyer education course and at least two hours of home counseling.
Frequently Asked Questions About Buying a Home in North Carolina
Buying a home is a significant financial and personal investment. MoneyGeek answered some frequently asked questions about buying a house in North Carolina to assist you on your path to homeownership.
Before purchasing a home in North Carolina, it’s important to ask yourself a few questions. Research possible locations, compile a list of your goals and estimate the associated expenses.
Homebuyers who value living in a location with a low population density and an abundance of outdoor activities may find North Carolina to be an attractive state in which to buy a house. Moreover, North Carolina has a lower average home price than the majority of U.S. states.
Home values in North Carolina have increased significantly over the past year. If you are financially equipped and committed to purchasing a home in North Carolina, you should act quickly to avoid further increases in home cost.
North Carolina's cost of living is inexpensive in comparison to other states. Nevertheless, the cost of living differs from city to city. MoneyGeek's cost of living calculator can help you determine if your income is sufficient to cover the cost of living in your desired location.
In North Carolina, the average real estate tax rate is lower than the national average property tax. Because property tax rates vary by county, you should research the specific rates in your area prior to purchasing a home.
Broadway is one of the most affordable cities in North Carolina for homebuyers.
sources
- Zillow. "North Carolina Home Values." Accessed October 23, 2022.
- Zillow. "United States Home Values." Accessed October 23, 2022.
- Zillow. "Compare Today's Mortgage Rates in North Carolina." Accessed October 23, 2022.
- US Department of Agriculture. "Single Family Housing Direct Home Loans in North Carolina." Accessed October 23, 2022.
- FHA. "FHA Down Payments For Homebuyers." Accessed October 23, 2022.
- U.S. Department Of Veterans Affairs. "VA Home Loans." Accessed October 23, 2022.
- Tax Foundation. "Taxes In North Carolina." Accessed October 23, 2022.
- International Association of Certified Home Inspectors. "Home Inspection Standards of Practice." Accessed October 23, 2022.